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Are there consequences for filing false chargebacks?

On Behalf of | Apr 8, 2022 | Criminal Defense |

Each year, millions of refunds are issued in New York by retailers, banks and credit card companies. A percentage of these chargebacks are issued fraudulently when consumers plan to receive a product or service without making a legitimate payment. Filing a chargeback seems innocent but is a crime that can lead to punishment.

Definition of chargebacks

A chargeback is a refund that is returned to a debit or credit card payer. The money transfer is reversed back to the consumer from the bank account or line of credit. Chargeback fraud occurs when the consumer attempts to make a fraudulent chargeback to his or her account.

For this to occur, a customer makes a legitimate purchase and wishes to receive the product or service without paying for it. The customer files a fraudulent claim with the bank where the charge was made in order to get a refund. The bank initiates a chargeback and refuses to pay the merchant. Alternatively, the customer can request the merchant to issue a refund by alleging that he or she made the purchase accidentally or bought the wrong item.

Legal consequences

A false chargeback is a type of fraud that is often used in criminal defense to suggest that it’s less serious than true fraud, such as stolen cards and identity theft. However, merchants will claim that they have to protect themselves from significant financial losses caused by chargeback fraud. Making a false chargeback in most states is punishable with a fine or imprisonment. In general, the penalties for credit card fraud vary from one to three years in jail and a fine for $1,000 to $10,000.

Every type of fraud is unlawful

A chargeback is a form of credit card fraud that can be punished under the law. Every conviction with its resulting fine or jail sentence is a serious matter to consider if you’re accused of committing this crime.

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